Guide to cryptocurrency

Cryptocurrency has been around for around nine years, but it has moved from “a new fad” known only within tech circles, to a much wider adoption amongst the average person in more recent years. There is now a lot more news coverage and knowledge around cryptocurrency as the market and its assets gain more momentum.

Cryptocurrency

A digital asset which is created and run on the blockchain. Cryptocurrency is made secure by being encrypted using cryptography. Cryptography secures and verifies transactions which means no third party is required to manage funds and thus a decentralised system, free from fees and governance, has been born.

The first cryptocurrency to ever exist was Bitcoin (BTC) and it is still the biggest today. Satoshi Nakamoto is known as the “inventor” of Bitcoin. To this day, we do not know who this person is, and it has been speculated that it could be several different people who collaborated and used Satoshi Nakamoto as a pen name to the paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. The first block of Bitcoin was mined in 2009 and it peaked in December 2017 when 1BTC was worth almost $20,000.

Despite the dips and volatility, the crypto market has been growing and since 2011 forks of Bitcoin appeared in the crypto space, for example, Litecoin. Forks are created when someone disagrees with the collective agreement on an existing cryptocurrency, and tries to create a coin that offers some kind of competitive advantage. Litecoin appears very similar to Bitcoin, being built upon Bitcoin’s open-sourced protocol, but the underlying codes vary and their function differs in a few ways: total amount of coins that can be produced, the transaction speed (it takes approximately 10mins for the network to confirm a block on Bitcoin, but just 2.5 mins with Litecoin) and the algorithms they employ (SHA-256 vs Scrypt).

In addition to the forks of Bitcoin, other coins have appeared that do not run on Bitcoin’s protocol. They run on their own blockchain and protocol that supports their native currency. All of these can be considered as altcoins – basically “alternative cryptocurrencies” to Bitcoin. There are now hundreds of altcoins on the market and you can buy them on one of the exchanges or during their token sale in an Initial Coin Offering (ICO).

One of the biggest second-generation cryptocurrency which appeared on the market in 2015 is Ethereum. This has the same principle as Bitcoin, which offers the electronic peer-to-peer cash system and digital tracking, but it is applied with smart contracts to enable developers to build and deploy any decentralised application (DApps). DApps may be supported with their own cryptocurrency – namely ERC-20 tokens, which are designed to function specifically on the Ethereum network. In order to make a transaction with ERC-20 tokens, smart contracts are deployed, and a gas amount will be charged. The gas is to cover the fee of using a certain amount of blockchain space on the Ethereum network. Payments are made in ETH.

Tokens

These represent an asset or function that resides on top of an existing blockchain. They can be categorised as below:

  • Security tokens

A crypto asset which is backed by a tradable asset and designed to be a company’s share. Due to the potential for profit, passive income and dividends, they are subject to federal security regulations.

  • Utility tokens

These tokens are created with intent to be used for a company’s product or service.

In contrast to security tokens, they are not designed as investments and are exempt from the federal laws that govern securities.

  • Asset tokens

These are digital tokens that represent a physical asset, i.e. Goldmint which tokenizes gold.

  • Reward tokens

These tokens are given to users on a platform as a reward for their activity or their network and reputation. i.e. Steem Power are used as token rewards for postings on the blockchain social media site called Steemit.

  • Equity tokens

These tokens are issued as stock or equity during initial coin offerings. Shareholders names and their voting are stored transparently on the blockchain.

  • Dividend tokens

This is the passive income, profits shared across token holders, in the form of dividend tokens.

BETR is a cryptocurrency that is considered an ERC-20 “utility token” built on the Ethereum network. You can trade it like any other coin and we are also building a system called the BetterBetting Node (BBN), a DApp that will provide access to a huge global liquidity pool, wholesale betting opportunities, no fees, plus a provably fair and robust payment system, offering attractive betting solutions for bet layors globally. As a utility token BETR will be used to place the bets on the BBN thus once live the demand for this token is estimated to increase significantly.